Pension Schemes Bill [HL]: Briefing for Lords Stages

On 30 October 2019, the second reading of the Pension Schemes Bill [HL] is scheduled to take place in the House of Lords. This briefing looks at the three principal areas the bill addresses: collective defined contribution pensions, the Pensions Regulator, and pensions dashboards.

One of the aims of the bill is to establish a framework for collective defined contribution pensions in the UK. These would be termed collective money purchase schemes in the legislation. Part 1 of the Pension Schemes Bill would establish a framework for setting up, operating and regulating collective money purchase schemes in England, Wales and Scotland. Part 2 would make provisions similar to those in Part 1 for Northern Ireland.

Part 3 of the bill would give new powers to the Pensions Regulator, the UK regulator of workplace pension schemes. The purpose of strengthening the powers of the regulator is so that it can respond earlier when employers put the viability of their pension schemes at risk.

Part 4 of the bill would set up a system for pensions dashboards. A pensions dashboard is a consumer-friendly digital interface that displays information about all of an individual’s pensions savings in one place. The bill would compel pension schemes to provide their savers’ data to dashboards and make other provisions allowing for the establishment of private dashboards and a state-sponsored dashboard.

The bill also contains provisions relating to:

• the funding of direct benefit pension schemes;
• pension scheme members’ right to transfer their pension savings;
• defining pensionable service for the purposes of calculating compensation from the Pension Protection Fund; and
• clarifying the definition of administration charges.

The bill has been broadly welcomed by other political parties and the pension industry. However, many commentators have noted the absence of measures they hoped would also have been included in the bill, such as expanding pensions auto-enrolment and regulation of ‘superfunds’.